TLDR
- Stellantis shares plummeted 24% following management’s decision to reduce its dividend, declare $26 billion in write-downs, and project that operating profit for the second half of 2025 would fall short of expectations
- The car manufacturer is discreetly bringing back diesel variants for at least seven vehicle models throughout Europe, as electric vehicle (EV) sales have not met anticipated levels
- Operating profits significantly declined from $25 billion in the 2022-2023 period to less than $10 billion in 2024, with profits almost disappearing by 2025
- New CEO Antonio Filosa unveiled a $13 billion investment in the U.S. and five new vehicles, outlining his strategy for recovery
- Despite the severe market downturn, analysts perceive value at present price points, with shares trading at 0.15 times sales compared to Ford and GM, which trade at 0.3-0.4 times sales
Stellantis shares experienced a significant decline last week. On February 6, the stock dropped 24% following a harsh announcement from management, which involved a dividend reduction and substantial write-downs. However, severe market downturns like this frequently present investment opportunities.
The company, which owns Chrysler, disclosed $26 billion in one-time expenses related to EV asset write-downs and warranty claims. It also projected that operating profit for the latter half of 2025 would fall below prior forecasts. The dividend for 2026 was eliminated. Additionally, the company issued $5 billion in convertible debt to bolster its financial position.
“What was most surprising was not so much the provisions and impairments, but rather the continued weak operating performance and the inability to generate cash,” stated Stuart Pearson, an analyst at Oxcap Analytics. Such news typically prompts investors to divest their holdings.
The financial figures reveal a challenging situation. Stellantis recorded approximately $25 billion in operating profits in both 2022 and 2023. These profits decreased to less than $10 billion in 2024, and by 2025, they had almost disappeared.
Strategic Shift on Electric Vehicles
However, the company is implementing changes that could alter its trajectory. In late 2025, it discreetly began reintroducing diesel variants for a minimum of seven car models throughout Europe.
This signifies a departure from the electric-vehicle-exclusive strategy, which has not yielded expected results. The company had previously stated that fully electric vehicles should constitute 100% of European sales and 50% of U.S. sales by 2030. Demand, however, did not meet these targets in either region.
“We have opted to retain diesel engines within our product lineup and, in certain instances, to expand our powertrain options,” Stellantis informed Reuters. “Our objective is to foster growth, which is why we are prioritizing customer demand.”
The return of diesel vehicles encompasses models such as the Opel Astra, Opel Combo van, Peugeot 308, Peugeot Rifter, and Citroën Berlingo passenger van. The company also intends to persist with the production of diesel variants for the DS7 SUV and various Alfa Romeo models.
In 2025, diesel vehicles represented only 7.7% of new car sales throughout Europe, a decrease from over 50% in 2015. Fully electric cars, by contrast, made up 19.5%.
However, diesel vehicles provide a competitive advantage. Chinese EV manufacturers such as BYD do not operate in the diesel market segment. BYD sold 188,000 vehicles in Europe in 2025, marking a 269% year-over-year increase and securing a 1.4% market share. Diesel offers Stellantis a means to counter this competition.
Path to Recovery
Antonio Filosa assumed the role of CEO in May 2025, following Carlos Tavares’s departure in December 2024. Late last year, Filosa unveiled a $13 billion investment in the U.S. and five new vehicles. His strategy appears to echo Lee Iacocca’s approach: prioritizing product development.
Emmanuel Rosner, an analyst at Wolfe Research, upgraded Stellantis shares subsequent to last week’s announcement. He noted, “The expectations have now been lowered, and a gradual improvement in earnings and free cash flow is anticipated in 2026 and 2027.” Rosner adjusted his rating from Underperform to Peer Perform.
Pearson has assigned an Overweight rating to the shares, with a price target of $10.70, representing a 40% increase from the $7.62 closing price on February 11. His analysis is direct: Stellantis is trading at 0.15 times sales, whereas Ford and GM are trading at 0.3 and 0.4 times sales, respectively.
Stellantis historically trades at 85% of the price-to-sales ratio of its competitors, including GM. Currently, it trades at 44%, which is its lowest point in five years. Reaching even half of its historical ratio would imply a stock price of $14, nearly double its present value.
Chris Senyek, a strategist at Wolfe Research, highlights that dividend reductions frequently precede a period of stock outperformance in the subsequent one to two years. This suggests that the situation is unlikely to deteriorate further.
The company is scheduled to release its full 2025 earnings on February 26. First-quarter results will be announced in April, and an investor day is planned for May. Any of these upcoming events could serve as positive catalysts.
In 2025, Americans purchased 16.7 million vehicles, marking the highest sales year since 2019. Europeans acquired 13.3 million cars, representing a 3% increase year-over-year. S&P Global anticipates that U.S. and European sales volumes will remain consistent in 2026.
North America contributes approximately 40% of Stellantis’s revenue and is largely protected from Chinese competition. Europe accounts for slightly less than 40% of sales, while South America provides about 10%. Furthermore, the company reintroduced the Jeep Cherokee and its Hemi V8 engine to the U.S. market.
